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Payyannur Educational Society v. Narayani And Another
Factual and Procedural Background
Two workmen engaged in excavation on the appellant’s land were buried alive in a landslide. The dependents of the deceased claimed compensation from the landowner (appellant) and two other respondents. The Workmen's Compensation Commissioner found that the appellant had employed the workmen and directed the appellant to pay compensation. The appellant challenged the Commissioner’s award through these appeals.
Legal Issues Presented
- Whether the Commissioner was correct in holding the appellant as the employer liable to pay compensation despite the appellant’s contention that the second respondent employed the workmen.
- Whether the appellant-society could avoid liability under Section 12(1) of the Workmen's Compensation Act, 1923 by arguing that excavation was not part of its trade or business.
- The proper interpretation of the words “trade or business” and “ordinarily” in Section 12(1) of the Act in the context of employer liability.
- Whether the appellant lost liability by selling the soil to the second respondent.
Arguments of the Parties
Appellant's Arguments
- The two workmen were not employed by the appellant but by the second respondent, who had been permitted by the appellant to excavate and collect soil.
- The excavation work was not part of the appellant society’s trade or business, which was solely educational and charitable in nature, thus Section 12(1) of the Act should not apply.
- The word “ordinarily” in Section 12(1) should be interpreted narrowly to exclude extraordinary or incidental activities like excavation.
- By selling the soil to the second respondent, the appellant lost ownership and therefore liability for the excavation work.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Unnikrishnan v. State of Andhra Pradesh, (1993) 1 SCC 645 | Work of imparting education is a charitable activity, not trade or business. | Appellant’s argument that education is not trade or business was noted but distinguished as not controlling for Section 12(1) interpretation. |
| Hassan v. Mohammed, 1994 (1) K.L.T 502 | “Business” in Section 12 of the Act should be understood as synonymous with trade. | Court rejected narrow synonymy and adopted a wider meaning of “business” for Section 12(1). |
| Travancore Devaswom Board v. Purushothaman, 1989 — II L.L.N 408 | Interpretation of “trade or business” in related contexts. | Court found no conflict with its wide interpretation of “business” in Section 12(1). |
| Bata Shoe Company v. Union of India, A.I.R 1954 Bom. 129 | “Business” has a wider meaning than “trade,” including activities occupying time and labour for profit. | Supported the court’s adoption of a broad meaning of “business” in the present case. |
| Public Works Department v. Commissioner, 1981 — I L.L.N 589 | Wide connotation of “business” in Workmen's Compensation cases. | Reinforced the court’s interpretation of “business” beyond trade alone. |
| Kailsdh Chandra v. Union of India, A.I.R 1961 S.C 1346 | “Ordinarily” is an elastic term with different meanings in different contexts. | Helped court clarify the meaning of “ordinarily” in Section 12(1) as “normally” or “otherwise.” |
| Vijayaraghavan v. Velu, 1973-I L.N.N 179 | Interpretation of “ordinarily” in Section 12 of the Act. | Supported the court’s conclusion on the meaning of “ordinarily” as used in the Act. |
Court's Reasoning and Analysis
The court began by affirming that the factual finding of the Commissioner—that the appellant employed the deceased workmen—is not subject to challenge on appeal under Section 30 of the Act without a substantial question of law. The appellant attempted to frame a substantial question of law by arguing the claimants admitted the workmen were employed by the second respondent, but the court proceeded to analyze the applicability of Section 12(1) of the Workmen's Compensation Act.
Section 12(1) imposes liability on a principal who contracts out work ordinarily part of his trade or business, making the principal liable as if he were the direct employer. The court examined the appellant’s argument that the excavation was not part of its trade or business, which was educational and charitable.
Rejecting a narrow interpretation, the court analyzed the ordinary meaning of “business” using dictionary definitions and relevant precedents. It concluded that “business” in Section 12(1) should be understood broadly as “task, duty, concern or undertaking to do a work,” not limited to trade or commerce. The court distinguished interpretations of “trade or business” in other statutes as inapposite here.
The court also interpreted “ordinarily” in Section 12(1) to mean “normally” or “otherwise,” referring to the principal’s normal course of action if he had not contracted out the work. This interpretation was supported by prior case law.
Regarding the sale of soil, the court held that the appellant retained ownership of the land and the soil until it was separated and transported, and therefore could not disclaim liability on that basis.
On this basis, the court held that the appellant is the employer vis-à-vis the victims under Section 12(1) of the Act and liable to pay compensation.
Holding and Implications
The court dismissed the appeals, affirming the Commissioner’s award holding the appellant liable to pay compensation to the dependents of the deceased workmen.
The direct effect is that the appellant must satisfy the compensation claim under the Workmen's Compensation Act. No broader precedent was established beyond the interpretation of Section 12(1) in this factual scenario.
Thomas, J.:— Two workmen while engaged in a land excavating operation, were buried alive under heaps of mud billowed on them in a landslide and the site became their grave instantaneously. Dependents of those who died in such a trice made claims for compensation from the owner of the land (appellant) and two others (respondents 2 arid 3). The Workmen's Compensation Commissioner (for short the Commissioner) found that it was the appellant who had employed them, and on that finding he directed the appellant to pay compensation amount to the dependents of those two victims. These appeals are in challenge of the common award passed by the Commissioner.
2. There is no dispute that at the time of the catastrophe the two workmen were engaged in excavation work on appellant's land. Appellant is a registered society called “Payyannur Educational Society”. Appellant's contentions were that the two workmen were not employed by the society but they were recruited by the second respondent to whom the society sold soil at the rate of Rs. 15 per lorry load and that the mishap occurred during the operation undertaken by the second respondent who was permitted by the society to do the excavatory work and collect the soil. In other words, appellant's main case is that it was not the employer.
3. The Commissioner found that the victims were actually employed by the appellant-society and hence it was held liable to pay the compensation amount assessed in accordance, with the table prescribed.
4. Learned counsel for the appellant contended that the aforesaid finding has no support from reliable evidence in the case and that the evidence has established the second respondent as the employer and that second respondent was permitted to dig the soil.
5. The finding on facts (that the deceased victims were the workmen of the appellant society) is not open to challenge in an appeal filed under S. 30 of the Workmen's Compensation Act, 1923 (for short the Act) without being linked to a substantial question of law. However, learned counsel formulated a question like this: When the claimants themselves admitted that the victims were engaged by the second respondent, is it open to the Commissioner to hold otherwise? Learned counsel contended that the aforesaid question is a substantial question of law.
6. We think, even assuming that the appellant's version, on that score, is correct, the ancillary question is whether the appellant-society can escape from liability under S. 12(1) of the Act. The sub-section is extracted below:
“Contracting.— (1) Where any person (hereinafter in this section referred to as the principal) in the course of or for the purposes of his trade or business contracts with any other person (hereinafter in this section referred to as the contractor) for the execution by or under the contractor of the whole or any part of any work which is ordinarily part of the trade or business of the principal, the principal shall be liable to pay to any workman employed in the execution of the work any compensation which he would have been liable to pay if that workman had been immediately employed by him; and where compensation is claimed from the principal, this Act shall apply as if references to the principal were substituted for references to the employer except that the amount of compensation shall be calculated with reference to the wages of the workman under the employer by whom he is immediately employed.”
7. Learned counsel for the appellant advanced the following arguments to bypass S. 12 of the Act. That provision can be invoked only if the digging work was part of “the trade or business” of the society and further such work should have been the normal business of the society. According to the counsel, the ordinary business of the society is to impart education and the digging work was not a part of it at all. Learned counsel invited our attention to the decision of the Constitution Bench of the Supreme Court in Unnikrishnan v. State of Andhra Pradesh, [(1993) 1 SCC 645 : A.I.R 1993 S.C 2178], in which it was held that the work of imparting education cannot be treated as trade or business, but it is only a charitable activity. He also cited the decision of the Division Bench of this Court in Hassan v. Mohammed, [1994 (1) K.L.T 502], which was rendered in a case involving Kerala Buildings (Lease and Rent Control) Act and tried to draw support for his contention that the word “business” in S. 12 of the Act must be understood as synonymous with trade.
8. Learned counsel then proceeded to contend that the word “ordinarily” in S. 12 means “usually” or in circumstances “other than extraordinary,” etc. In support thereof he cited a number of decisions which we do not wish to catalogue here except pointing out that in those decisions the word “ordinarily” was construed in other contexts and not in the context of S. 12 of the Act.
9. It is trite law that the safe guidance for interpreting any provision in a statute or for understanding the scope and meaning of a particular word in the provision, is to ascertain the intention of the Legislature. However wide in the abstract, general words and phrases are more or less elastic and admit of restriction or extension to suit the legislative intention. “The object of the legislation would afford answer to the problems arising from ambiguities which it contains”. (Vide Maxwell on the Interpretation of Statutes 12th Edn., at page 86).
10. We bear in mind that one of the objects for enacting the Act even as early as 1923 was to ameliorate the hardships of economically poor workmen who were exposed to risks in work, or occupational hazards by providing a cheaper and quicker machinery for compensating them with pecuniary benefits. With the progress of times the concept impelled the Courts, by and large, to make stretched constructions without violating the fundamental principles in order to advance the above object. Looking at it from the above angle, the object of the Legislature in providing S. 12 of the Act is to safeguard the right to compensation when the employer delegates the work to another person.
11. We will now proceed to consider in what manner the words “business” and “ordinarily” in S. 12 of the Act should be understood.
12. Section 3 of the Act imposes a liability on the employer to pay compensation in cases where personal injury is caused to a workman by accident arising out of and in the course of the employment. Section 12 of the Act has, in effect, stretched the contours of the word “employer” wider as to include the person contracting with another person for carrying out the work of the former. In such cases, the provision enjoins that the principal shall stand substituted as the employer. This is achieved by the words “where compensation is claimed for the principal, this Act shall apply as if references to the principal were substituted for references to the employer”. The principal may have any claim for contribution from his contractor or delegatee, but that can be dealt with as between them separately. The victim or his dependents are not to be involved in such disputes. This much can easily be discerned from the section.
13. The meaning of the two crucial words in S. 12 has to be understood in the above context. We do not think that the word “business” in the section need be restricted to what is synonymous with trade. The use of the conjunction “or” should be understood as disjunctive for covering totally different areas unconnected with “trade”. A reference to the dictionary would reveal that the word “business” has different shades of meanings. Among them the most suitable in the present context is that which “The Oxford Advanced Learners Dictionary of the Current English” has given as its third meaning: “Task, duty, concern or undertaking to do a work”. Some succinct illustrations have also been given in the said dictionary to drive the meaning home. They are: “It is a teacher's business to help his pupils; I still make it my business to see that money is paid promptly; that is no business of yours”. In none of the illustrations the word “business” is used to denote anything connected with trade or commerce. We think that, the word business used in S. 12 of the Act has been intended to convey the meaning as the work or task undertaken by the person concerned which are not restricted to trade or commercial work alone. Hence the interpretation given to the words “trade or business” appearing in Art. 19 of the Constitution, or in the Rent Control Law is not apposite in the context of S. 12 of the Act. We may observe with great respect that the Division Bench of this Court in Travancore Devaswom Board v. Purushothaman, [1989 — II L.L.N 408], has not adopted any principle in conflict with the above view.
14. In Bata Shoe Company v. Union of India, [A.I.R 1954 Bom. 129], Gajendragadhkar, J. (as he then was) observed that the word “business” in its wider connotation may have more extensive meaning than the word “trade”. His Lordship then quoted Jessel M.R in Smith v. Anderson, [(1880) 15 Ch.D 247], who stressed the meaning of business as “anything which occupies the time and attention and labour of a man for the purpose of profit”. This wide meaning was followed in Public Works Department v. Commissioner, [1981 — I L.L.N 589], by a Division Bench consisting of Dr. A.S Anand, J. (as his Lordship then was) and I.K Kotwal, J., in Workmen's Compensation cases. We are, therefore, emboldened by the above decisions in adopting the wide connotation for the word “business” in the present case.
15. Our next endeavor is to ascertain what the Legislature meant by the word “ordinarily” in S. 12 of the Act. The word “ordinarily” is an elastic term. It is seen used in different statutes. The word has different shades of meaning in different contexts (vide Kailsdh Chandra v. Union of India, [A.I.R 1961 S.C 1346]. If it is used for referring to jurisdictional aspects it may mean “in large majority of cases but not invariably”. When the word is used for referring to residential qualification it may sometimes include even temporary residence. But the word “ordinarily” is employed in S. 12 of the Act for a different connotation. That has to be understood in the background of the preceding portion in the section wherein execution of the work carried out through any other person contracted by the principal for this purpose is mentioned. What the principal would have done if he has not contracted with another person to carry out that work? He himself would have normally done that work or caused it to be done under his supervision. The word “ordinarily” is used in S. 12 of the Act for projecting that idea. So the word “ordinarily” in S. 12 of the Act means “otherwise, normally.” We cannot confer any other meaning to the term “ordinarily” as it appears in the section. We did not find anything contrary to the above legal position in the decision of the Division Bench of this Court in Vijayaraghavan v. Velu, [1973-I L.N.N 179].
16. Learned counsel for the appellant lastly contended that as the soil was sold to the second respondent, appellant had lost any ownership thereof and hence he cannot be made liable. What was sold by the appellant was only the soil and not the land. As long as the soil was not separated and transported, it remained as part of the land. The work involved in transforming land into soil must necessarily have been done when the ownership and title of the land remained with the appellant. So the appellant cannot disclaim liability in that line either.
17. When the legal position is understood thus, we are of the view that appellant is the employer vis-a-vis the victims, as per S. 12 of the Act. Appellant is, therefore, liable to pay the compensation due under the Act to the claimants. Accordingly, we dismiss the appeals.
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